I can only imagine the number of deals that occur via whispers and handshakes at REIA meetings, inboxes on Bigger Pockets, or the text from a realtor to whom you sent a "thank you" card.

It hadn't occurred to me to ask that the seller escrow money for additional treatments if needed until I read your message. 

The nice part about student housing if your in a good market by a nice college you are basically partnering up with the parents so payments are easier to collect (usually online) and if damages occur they are also very easy to collect since parents that send kids to a good college usually have their finances in order and care about their credit.

Rental prices will most likely go up as a result of the housing shortage that will occur temporarily.

If neighboring tenant is afraid of calling police, let them know the next time it's occurring to notify you and you will call police about the disturbance.You can give tenants a disturbance notice, lease violation. if  it's reported to you, if you need to go over and check it out during a disturbance. 

It occurred to me that we could sell the house after the refinance is finished and take the new gain / difference between 120,000 and 155,000 which would be 35,000 (not including closing cost and commissions).  

I appreciate the feedback I've decided to not use him as an employee and just bite the bullet as things occur and instead just save the fee I would have paid to cover any expenses as they arise really appreciate the feedback

Trouble is, you may get the recorded sales price, but nothing about concessions, days on markets, listing price, or price changes that occurred while it was listed.  

How likely is a transaction like this to occur?

Then I would amend the rental agreement to put more responsibility onto the tenant for maintaining it that way and for notifying me in a timely manner if a re-infestation occurs.